The growth in road transport during the 1920s and 1930s greatly reduced revenue for the rail companies. Rail companies accused the government of favouring road haulage through the subsidised construction of roads. The railways entered a slow decline owing to a lack of investment and changes in transport policy and lifestyles. During the Second World War the companies' managements joined together, effectively forming one company. A maintenance backlog developed during the war, and the private sector only had two years to deal with this after the war ended. After 1945, for both practical and ideological reasons, the government decided to bring the rail service into the public sector.

This is what the BR network would have looked like if the Beeching Axe II plans had been implemented (all lines except those bolded would have been closed

From the start of 1948, the "big four" were nationalised to form British Railways (latterly "British Rail") under the control of the British Transport Commission. Although BR was a single entity, it was divided into six (later five) regional authorities in accordance with the existing areas of operation. Though there were few initial changes to the service, usage increased and the network became profitable. Regeneration of track and stations was completed by 1954. In the same year, changes to the British Transport Commission, including the privatisation of road haulage, ended the coordination of transport in the UK. Rail revenue fell and in 1955 the network again ceased to be profitable. The mid-1950s saw the rapid introduction of diesel and electric rolling stock, but the expected transfer back from road to rail did not occur and losses began to mount.

The desire for profitability led to a major reduction in the network during the mid-1960s lead to ICI manager Dr. Richard Beeching being given the task by the government of re-organising the railways. Many branch lines were closed because they were deemed uneconomic ("the Beeching Axe"), removing much feeder traffic from main line passenger services. The closure of many freight depots that had been used by larger industries such as coal and iron led to much freight transferring to road haulage. Beeching was going to close all but the "major trunk routes" in the Beeching II report. This was never implemented by BR.

Passenger services experienced a renaissance with the introduction of high-speed inter-city trains in the 1970s. Passenger levels have fluctuated since this time, increasing during periods of economic growth and falling during recessions. The 1980s saw severe cuts in government funding and above-inflation increases in fares, and the service became more cost-effective. In the early 1990s the five geographical Regions were replaced by a Sector organisation, where passenger services were organised into Inter City, Network SouthEast, and Other Provincial Services sectors. This new organisation showed promise of being a more efficient organisation of the railways, but within a couple of years of its implementation the structure was fragmented by the privatisation process.

Railway operations were privatised during 1994-1997. Ownership of the track and infrastructure passed to Railtrack, whilst passenger operations were franchised to individual private sector operators (originally there were 25 franchises) and the freight services sold outright (six companies were set up, but five of these were sold to the same buyer). The government claimed that privatisation would see an improvement in passenger services. Passenger levels have since increased to above the level they had been at in the late-1950s.

The public image of rail travel was severely damaged following the series of significant accidents after privatisation. These included the Hatfield accident, caused by a rail fragmenting due to the development of microscopic cracks. Following the Hatfield accident, the rail infrastructure company Railtrack imposed over 1200 emergency speed restructions across its network and instigated an extremely costly nationwide track replacement programme. The consequent severe operational disruption to the national network and the company's spiralling costs set in motion the series of events which resulted in the ultimate collapse of the company, and its replacement with Network Rail, a state-owned, not-for-dividend company.

At the end of September 2003 the first part of High Speed 1, a high speed link to the Channel Tunnel and on to France and Belgium, was completed, significantly adding to the rail infrastructure of the country. The rest of the link, from north Kent to St Pancras railway station in London, opened in 2007. A major programme of remedial work on the West Coast Main Line has been ongoing since 1997, but this has gone way over budget (£10bn), is running 4 years late and will still not bring the line up to the standards originally promised by Railtrack.

In the 2002–3 operating year, franchised services provided 976 million journeys totalling 39.7 billion passenger kilometres of travel, which was an increase over 1986–7 of 32% in journeys (from 738 million) and 29% in passenger kilometres (from 30.8 billion). On the other hand, taking a longer term view the number of journeys in 2002–3 was lower than for the 1950–60 period; the passenger kilometres figure, after being a flat from 1965–1995, surpassed the 1947 figure for the first time in 1998, and continues to rise steeply.

The key index used to assess passenger train performance is the Public Performance Measure which combines figures for punctuality and reliability. Performance against this metric has been especially poor since mid-2000. From a base of 90% of trains arriving on time in 1998, the measure dipped to 75% in mid 2001, and by the end of the 2002–3 period, had recovered to only 80%. However as of September 2006 the PPM stands at 87.5% after a period of steady increases in the annual moving average since 2003.

A Class 165 at Guildford. These trains are used for local services throughout the country.

The real increase in rail fares after accounting for inflation over the 1995–2004 period was 4.7%. For some years Britain has been said to have the highest rail fares in the world [1].

Average rolling stock age — thought to be an indicator of passenger comfort — fell slightly from the third quarter of 2001–2 to the third quarter of 2003–4, from 20.7 years old to 19.3 years old.

Although passengers rarely have cause to refer to either document, all travel is subject to the National Rail Conditions of Carriage, and all tickets are valid subject to the rules set out in a number of so-called technical manuals, which are centrally produced for the network.

Freight services

There are four main freight operating companies, the largest of which is English, Welsh and Scottish Railway (EWS). There are also several smaller independent operators including Mendip Rail. Types of freight carried include intermodal — in essence containerised freight — and coal, metals, oil, and construction material. Freight services have been in steady decline since the 1950s, although the Department for Transport's Transport Ten Year Plan calls for an 80% increase in rail freight measured from a 2000–1 base.

Statistics on freight are specified in terms of the weight of freight lifted, and the net tonne kilometre, being freight weight multiplied by distance carried. 87 million tonnes of freight was lifted in the 2002–3 period, against 138 million tonnes in 1986–7, a decrease of 37%. 18.7 billion net tonne kilometres (11.4 billion net ton miles) of freight movement were recorded in 2002–3, against 16.6 billion (10.1 billion) in 1986–7, an increase of 13%.

A symbolic loss to the UK rail freight industry was the custom of the Royal Mail, which from 2004 discontinued use of its 49-train fleet, and switching to road haulage after a near 170-year-preference for trains. Mail trains had long been part of the tradition of the UK railways, not least because of the film Night Mail, for which W. H. Auden wrote the poem of the same name.

Leasing services

At the time of privatisation, the rolling stock of British Rail was sold either directly to the new operators, as in the case of the freight companies, or to the three ROSCOs (rolling stock leasing companies) which lease or hire stock to passenger and freight train operators. Leasing is relatively commonplace in transport, since it enables operating companies to avoid the complication associated with raising sufficient capital to purchase assets; instead, assets are leased and paid for from ongoing revenue. Since 1994 there has been a growth in smaller spot-hire companies that provide rolling stock on short-term contracts. Many of these have grown thanks to the major selling-off of locomotives by the large freight operators, especially EWS.

Unlike other major players in the privatised British railway system, the ROSCOs are not subject to close regulation by the economic regulatory authority. They were expected to compete with one another, and they do, although not in all respects.

Since privatisation in 1995, the ROSCOs have faced criticism from a number of quarters - including passenger train operating companies such as GNER, Arriva and FirstGroup - on the basis that they are acting as an oligopoly to keep lease prices higher than would be the case in a more competitive market. In 1998, Deputy Prime MinisterJohn Prescott asked Rail RegulatorJohn Swift QC to investigate the operation of the market and make recommendations. It was believed by many at the time that Prescott favoured much closer regulation of the ROSCOs, perhaps bringing them into the net of contract-specific regulation, i.e. requiring every rolling stock lease to be individually approved by the Rail Regulator before it could be valid. Swift's report did not find major problems with the operation of what was then an infant market, and instead recommended that the ROSCOs sign up to voluntary, non-binding codes of practice in relation to their future behaviour. Prescott did not like this, but he did not have the legislative time allocation to do much about it. Swift's successor as Rail Regulator, Tom Winsor, agreed with Swift and the ROSCOs were happy to go along with codes of practice, coupled with the Rail Regulator's new powers to deal with abuse of dominance and anti-competitive behaviour under the Competition Act 1998. In establishing these codes, the Rail Regulator made it clear that he expected the ROSCOs to adhere to their spirit as well as their letter. The codes of practice were duly put in place and for the next five years the Rail Regulator received no complaints about ROSCO behaviour.

In July 2004, to the surprise of many, the Department for Transport's White Paper on the future of the railways contained a statement that it was dissatisfied with the operation of the rolling stock leasing market and believed that there may have been excessive pricing on the part of the ROSCOs.

In June 2006, Gwyneth Dunwoody, the House of CommonsTransport Select Committee chair, called for an investigation into the companies. Transport commentator Christian Wolmar has asserted that the high cost of leasing is due to the way the franchises are distributed to the train operating companies. While the TOCs are negotiating for a franchise they have some freedom to propose different rolling stock options. It is only once they have won the franchise, however, that they start negotiating with the ROSCOs. The ROSCO will know the TOC's requirements and also knows that the TOC has to obtain a fixed mix of rolling stock which puts the train operating company at a disadvantage in its negotiations with the ROSCO. However, Wolmar considers it a mistake to blame the ROSCOs who are simply behaving in the way commercial companies always behave. Ultimately the problem for Wolmar is the system and that is down to the government who are not prepard to seek a more workable solution (On the Wrong Line 289).

On 29 November 2006, following a June 2006 complaint by the Department for Transport alleging excessive pricing by the ROSCOs, the Office of Rail Regulation announced that it was minded to refer the operation of the market for passenger rolling stock to the Competition Commission, citing, amongst other factors, problems in the DfT's own franchising policy as responsible for what may be regarded as a dysfunctional market. ORR said it will consult the industry and the public on what to do, and will publish its decision in April 2007. If the ORR does refer the market to the Competition Commission, there may well be a hiatus in investment in new rolling stock whilst the ROSCOs and their parent companies wait to hear what return they will be allowed to make on their train fleets. This could have the unintended consequence of intensifying the problem of overcrowding on some routes because TOCs will be unable to lengthen their trains or acquire new ones if they need the ROSCOs to co-operate in their acquisition or financing. Some commentators have suggested that such an outcome would be detrimental to the public interest. This is especially striking since the National Audit Office, in its November 2006 report on the renewal and upgrade of the West Coast main line, said that the capacity of the trains and the network will be full in the next few years and advocated train lengthening as an important measure to cope with sharply higher passenger numbers.

Statutory framework

UK railways are in the private sector. As such, they are not controlled by central government, although they are subject to economic and safety regulation by arms of government.

In 2006, using powers in the Railways Act 2005, the Department for Transport took over most of the functions of the now wound up Strategic Rail Authority. The DfT now itself runs competitions for the award of passenger rail franchises, and, once awarded, monitors and enforces the contracts with the private sector franchisees. Franchises specify the passenger rail services which are to be run and the quality and other conditions (for example, the cleanliness of trains, station facilities and opening hours, the punctuality and reliability of trains) which the operators have to meet. Some franchises receive subsidy from the DfT for doing so, and some are cash-positive, which means that the franchisee pays the DfT for the contract. Some franchises start life as subsidised and, over their life, move to being cash-positive.

The other regulatory authority for the privatised railway is the Office of Rail Regulation, which, following the Railways Act 2005, is the combined economic and safety regulator. It replaced the Rail Regulator on 5 July 2004. The Rail Safety and Standards Board still exists, however; established in 2003 on the recommendations of a public inquiry, it leads the industry's progress in health and safety matters.

Local metro and other rail systems

A number of towns and cities have various types of metro system. Heavy rail underground(subway) technology is used in the London and Glasgow Underground systems. Light rail with underground sections in the city centre exist in Newcastle, Sunderland and in the London Docklands. The light rail systems in Sheffield, Manchester, Croydon and the West Midlands use a combination of street running in the city centres and former conventional rail lines in the suburbs. Blackpool has the one remaining traditional tram system. Monorails, heritage tramways, miniature railways and funiculars also exist in several places. In addition, there are a number of heritage (mainly steam) standard and narrow gauge railways, and a few industrial railways and tramways. Some lines which appear to be heritage operations are actually part of the public transport network; the Romney, Hythe and Dymchurch Railway in Kent regularly transports schoolchildren.

Railway stations

Most UK railway stations date from the Victorian era and are located on the edge of town centres. Major stations are generally in large cities, with a particular concentration in London, but some important railway junction stations lie in smaller cities, for example Crewe station and Carlisle station. Other places expanded into towns and cities because of the railway network, Swindon for example was little more than a village prior to the Great Western Railway siting their locomotive works there. In many instances geography, politics, or military considerations caused stations to originally be located further from the towns they served, until, with time, these issues could be overcome (for example, Portsmouth had its original station at Gosport).